Potash Corp sees possible bounce in its market in early 2014

December 04, 2013|Reuters

By Rod Nickel

WINNIPEG, Manitoba, Dec 4 (Reuters) - A bounce in slumpingpotash markets is possible next year, assuming China steps backinto the market and Russia and Belarus paper over differencesthat have disrupted the market, a senior official of Potash Corpof Saskatchewan said on Wednesday.

But if the one-time partners don't reconcile, conditions inan already weak market could get worse, the chief financialofficer of Potash Corp, Wayne Brownlee, told an investorconference.

Potash Corp, the world's biggest fertilizer company, said onTuesday it was cutting its workforce by 18 percent to lowercosts in an oversupplied industry.

Potash prices have weakened in the past year, especiallyafter a breakup of top exporter Belarusian Potash Company (BPC)in mid-summer prompted major buyers like China to move to thesidelines to await cheaper prices.

A supply contract in the first quarter of 2014 between Chinaand Canpotex Ltd -- the export arm of Potash Corp, Mosaic Co and Agrium Inc -- would set a price floor,Brownlee said at the Citi Basic Materials conference in NewYork.

Indian buyers might then lock in prices with Canpotex,followed by deals in other markets.

"There's a recipe here for a nice bounce in the first halfof next year," he said.

A rebound also hinges on whether the former partners in BPC- Russia's Uralkali OAO and Belaruskali of Belarus -recreate their partnership. "If there's no reconciliationbetween the Russians and Belarus, then the market still has thepotential to dip," Brownlee said.

Belarus-born billionaire Dmitry Mazepin and Russian tycoonMikhail Prokhorov recently bought stakes of 20 percent and 21.75percent stakes, respectively, in Uralkali, leading tospeculation that Uralkali would seek a reunion with Belaruskali.

"The issue we see is not so much the demand side," Mosaic'schief operating officer, Joc O'Rourke, said at the sameconference. "In potash, yes there's probably a bit of anoversupply ... but we do see that tailing off and demandcatching up fairly quickly."

Potash Corp shares rose 0.9 percent in Toronto and 0.4percent in New York in early afternoon trading. Mosaic shareswere up 2.8 percent in New York.